Nick D’Aloisio has officially earned his seat at the cool kids’ table. The 17-year-old high school student this week sold his news-aggregator app Summly to tech giant Yahoo for a reported $30 million in cash and stock. While he’s finishing up his diploma, he’ll also start work at Yahoo’s London office. Meanwhile, Yahoo plans to enhance its own mobile apps with the technology developed for Summly, which uses an algorithm to automatically produce easily digestible summaries of news stories.

The issue now isn’t what fancy car the teenager plans to buy with his millions. The real question is whether Summly, and now Yahoo, can take news stories from around the Web, present altered versions of them, and not run afoul of copyright law.

A court ruling last week in New York against a Norway-based news aggregator has brought the issue of copyright infringement in the media world back to the fore. The Associated Press sued and defeated Meltwater, a subscription-based media-monitoring service, for providing snippets of news stories to clients without licensing the content from AP. Meltwater argued that posting a headline, lead paragraph and one or two other relevant sentences of a story constituted fair use under copyright law and was not so different from what Google provides when a user types a query into its search bar. But U.S. District Judge Denise Cote did not agree, writing in her decision:

The news reporting and research upon which Meltwater relies was not done by Meltwater but by the AP; the copyrighted material that Meltwater has taken is the news reporting and research that AP labored to create … Permitting Meltwater to take the fruit of AP’s labor for its own profit, without compensating AP, injures AP’s ability to perform this essential function of democracy.

AP’s win marks a significant victory for media companies that feel they’ve lost control of their content in the digital age. News-industry heavyweights have tussled with aggregators before, but usually through threatening words or private settlements. In 2008 the Associated Press sued All Headline News, a now defunct website that was rewriting AP stories without attribution. The site ended up paying AP an undisclosed sum in a settlement. In 2009, Rupert Murdoch, owner of News Corp., said Google and Yahoo were stealing the news by aggregating it and profiting from it on their own websites. The New York Times Co. also settled in a 2008 case where a hyperlocal news site run by the Times-owned Boston Globe was sued for aggregating another local site’s links and headlines.

Now Meltwater could be on the hook for as much as $150,000 for each of the 33 articles for which they violated copyright law. Still, it’s not clear that AP or any other media company will have the ability — or the desire — to piggyback off this decision to target mobile news aggregators like Summly and Flipboard. “Fair use is a very fact-specific test,” says David Ardia, co-director of the University of North Carolina Center for Media Law and Policy. “Each of these decisions is a tree within a forest that is growing slowly, especially as technology changes.”

Meltwater mostly stands apart from everyday aggregators in its approach. The company charges its business clients thousands of dollars annually for access to its database of news snippets, a key difference from most services that Ardia says played heavily into the judge’s decision. Another difference: Summly doesn’t actually use the language of the articles it’s lifting from. Instead, a computer algorithm automatically rewrites and summarizes the pertinent points. By using fresh phrasing, the app skirts some copyright concerns. “If you take a story and you pull out the facts and you rewrite the story to contain those facts, what you are doing is not copyright infringement,” explains Andy Sellars, a staff attorney for the Digital Media Law Project housed at Harvard University. “When people complain about websites that are doing really sloppy rewrites of other people’s stories and posting them online … it’s not a copyright concern that they’re raising.”

Perhaps most critically, Meltwater wasn’t bringing AP much traffic. Meltwater links had a 0.08% click-through rate to AP websites, a number that the ruling judge thought was paltry. In the decision the judge reasoned that Meltwater was leveraging AP’s copyrighted material to act as a competitor instead of as a source driving traffic back to AP. But low click-through rates are common online, Sellars says. Using that as a basis for judgment “is not grounded in the reality of the Internet,” he says.

In evaluating digital platforms like Meltwater or Summly the courts seek to strike a balance between protecting technological innovation and quality journalism, two sectors that can provide a public good. The AP ruling hardly sets a definitive precedent, though, and is likely to be appealed later this year. Expect the fights between old and new media paradigms to continue — and to potentially reach more mainstream products.

“Good journalism is expensive and the Associated Press ought to be able to ensure that its members can continue to produce good, high-quality journalism,” Ardia says. “What we want to make sure, however, is that the law doesn’t enshrine a certain business model for doing so, where innovation can give us new ways of producing news. That’s a tension that gets worked out in these individual cases, but it’s one that society has great interest in seeing resolved.”

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Wow, this is highly slanted by the media. The question shouldn't be whether or not it is legal (and it most certainly is and should be) but why the news organizations are completely inept to the point where they don't recognize the benefit of apps and services that link to their own news sites.

These apps as well as Google News and other aggregators actually drive traffic to their websites. It is a complete win-win. But no, they have to whine, loudly, about them because they don't have full control of the user from end to end. I am sick and tired of the media prattling on and on about their loss of control (a control they abuse and rarely ever deserved in the first place) and claiming damages.

Seriously what damages? These tools are driving customers to news sites thereby increasing the revenue of the whining news companies. And yet these companies seem to think that the creators/owners of these tools owe them something? What a bunch of ungrateful idiots. This arrogance and sense of entitlement and excessive amounts of control are the reasons why the major media companies are now struggling. Because people recognize that things can be better and will go to the sources that treat them like customers, not criminals.

These old timers running the organizations need to retire and let the younger, wiser, less corrupt generations take over already. The old timers are the ones destroying the businesses.

i don't really understand all the hype about this app....don't RSS subscription feeds almost satisfy this app's perceived functions? The RSS format is widespread and common and it's been around for forever. It also summarises news articles, blog posts into feeds linked to the complete articles.

while i can't comment on how the content analytics + summarisation dynamics within Trimit/Summly compares to that of the RSS (never used or heard of Summly before), i assume it is more intricate and elaborate & condenses texts holistically?

why not make it a plugin for your browsers, so whenever you visit any websites, it automatically sums up the articles you wanna read, so by doing so users agreed to use that program for easy viewing at the same time summly is not liable for the websites they sum up for u, as readers are the end user visiting the sites, thus avoiding the need to pay AP for the bull****

When I was a public relations officer in the military, I used to prepare summaries of pertinent news stories for senior executives. In other words - I did the exact same job that D'Aloisio's application does. The only difference is that it cost more and took longer.

Yahoo should pay the Associated Press a reasonable fee for using AP's intellectual property. There's still plenty of money to go around.

c'mon, really? the young man has made a remarkable contribution at his age, and all we're going to do is discourage his efforts? if he had gone out and murdered someone, he would surely be tried as an adult. isn't it time that we begin promoting this kind of action instead of condemning it at every turn? on my behalf, keep up the good work young man!

Wait, so facts about something in the world are now able to be copyrighted? Am I hearing that right? I can't repeat facts or else I get cited for copyright infringement That was totally not the intention of the law, which is why this whole entire debate is flawed, because the law is flawed, and needs to be totally rewritten. and yes, it should include piracy laws.

If it is OK to suck content from a website and post it on ours, then let's all do this ladies and gentlemen!!! Suck CNN completely, suck Yahoo! completely for their content, put your own ads in your website and make money off their content...see if they yell...

It's 100% illegal what they are doing. They suck content other companies worked to write and post, recreate the content in the app without given credit to the source. Also, the reason why Yahoo paid this non-sense amount of money is because it could get money for ads. Well, what about the companies who created those content and have paid ads on their website, they are losing out for their work??? Don't be a fool and think this is OK...

Yahoo doesn't care about the companies application or its capabilities, they were bought due to their patent (pending) ownership of a couple of key patents. The company has patents and can provide prior art to gesture based navigation on a touchscreen computer. The company in itself was groovy, but the fact they have legally verifiable proof of gesture based controls with source control registration well before a popular "Patent Troll" did, should allow Yahoo to cross licenses patents and have leverage.

The Motorola, Google, HTC and Samsung coalition will likely be using cross licensing as leverage to stop the "Patent Troll" from consistently using patent litigation to maintain their market share. If you get bored look up the patents I speak of specifically covering gesture based controls, scrolling bounce and linear menu systems using gestures as an input action.

It should be interesting that Yahoo will shutdown the service, hint hint.

This is entirely legal, and is done by millions of students each and every single day....note the algorithm selects an article (say, Obesity Caused by Fast Food) and re-writes the content as Overweight? Quick Serve Meals the Cause?

In no way should this young man be challenged for his ingenuity...in fact, most "articles," are simply rehashes of one another, in any case.

Frankly, such an algorithm would be relatively easy to defeat, simply by writing any such content clearly, cogently, and succinctly - using language that cannot be readily replicated in synonym all that easily (but give it a year or two).

I realize reproduction of any article or text from any news agency, or from any publication that is copyright is illegal.

My question is, what about links? If you have a web page, and post a link to a news item or news site, is this technically illegal? The catch here is if there were no links allowed, these news sites would no longer be able to have visitors. Over 98% of visitors click on a link from another site or from a search engine to visit any site. Without links people would never be able to find a site of any kind unless they knew all these complicated names by heart!

I can see that if someone copies and pastes the text of an article or news item, and then changes the name to their own this is definitely a serious issue. This would be a form of plagiarism from what I believe.

Google is the largest example of copyright infringement; the company uses OTHER persons' information to create a searchable database that THEY make money on by encouraging those sources of information to shell out money in a pay-per-click format. So, unless they ONLY show results that people pay for to appear within the search results, Google is also stealing and reproducing snippets of copyrighted material.

No different than youtube getting big on old television episodes and music videos and then selling for $750 million. In my mind it kind of puts a damper on the whole suing for P2P copyright infringement thing. The corporate world is not against copyright violations after all.

The copyright issues immediately crossed my mind when I first read of this app. I am a former radio news reporter and I would be running afoul of copyright laws if I was taking other sources of news content and re-broadcasting it without first getting permission from the source, or providing compensation to the original source. Hate to burst the bubble of the developer of that app, but copyright laws exist to prevent these types of things from happening. If he was the writer or producer of that news content, I am sure he would demand the same type of copyright and monetary protections.

My problem isn't with whether this app is violating copyright law. My problem is with Yahoo paying the kid $30 million dollars for it. First they go and say nobody can work remotely anymore but then they go and pay $30 million to a kid for an app that really doesn't do anything more than any other news app out there? That's just freakin' rediculous in my opinion.

On a side note, good goin' to the kid who created the app and ended up with the money. He's obviously a fairly smart kid.